[Letter] Bailout risks papering over Transnet failures

A government (read: taxpayer) takeover of some (or all) of Transnet’s R130bn debt pile, or some form of cash injection, could well provide the state-owned logistics company with some measure of breathing room.

However, doing so risks papering over the structural and policy causes behind Transnet’s struggles while providing a tacit stamp of approval of how ministers, government departments and numerous iterations of the state-owned enterprise’s board have “managed” it.

Would the removal of preferential procurement requirements accompany any form of bailout or debt relief? Will such assistance require that rail corridors be opened up to private sector investment and competition — immediately, not “down the line”, at an undetermined point in future. Should Transnet receive such cash what restrictions, if any, will be imposed to prevent political interference and pressure regarding board decisions?

Absent these kinds of discussions and decisions, direct financial assistance for Transnet will only punt into touch those truly meaningful reforms and decisions that the country’s whole logistics space requires.

In 2023 the Port of Maputo increased the volume of products shipped to a record 31.2-million tonnes. A $2bn port expansion recently received the green light. Namibia is also investing in its port and logistics capacities.

The longer SA focuses on short-term “fixes” such as bailouts, and avoids real reforms, its trade potential (and benefits from trade) will be hobbled.

Letter originally appeared here.